Samsung Heavy says $471 million FPSO order cancelled

SEOU: Samsung Heavy Industries Co Ltd said an Asian firm which it did not identify cancelled an order for a floating production, storage and offloading (FPSO) unit worth 505 billion won ($471.71 million).

The buyer had previously delayed the order due to financing woes and difficulty in obtaining a charter for the vessel, Samsung Heavy said in the regulatory filing on Monday.

The order - worth about 4 percent of the annual sales of the world's third-largest shipbuilder - was made in June 2007, and Samsung Heavy was initially scheduled to deliver the FPSO by September 2010. The delivery deadline was subsequently postponed to Dec. 31, 2012.

This year has been a challenging year for some FPSO owners, with the euro zone debt crisis making it tougher to obtain financing for projects and energy explorers holding back in response to an uncertain demand outlook for oil.

"It is not an insignificant sum, so it may affect the company's fourth-quarter earnings," said Shim Won-seob, an analyst at IBK Investment & Securities. "However, since it is a FPSO, rather than a merchant vessel, they will probably be able to find another buyer for it."

Some analysts said this particular cancellation was likely due to the individual circumstances of the buyer.

Shares in Samsung Heavy closed at 38,550 won on Friday, up 2.25 percent. Trading will resume on Wednesday when the stock market opens.

South Korean shipbuilders underperformed in 2012, with the sub-index gaining just 3.4 percent compared to the Korea Composite Stock Price Index (KOSPI), which rose 9.4 percent.

source : Economic Times